How Much Do You think You Need to Retire? What Age Will You/Spouse Retire? General Retirement Issues (Part 2)

Parent Cafe
9430

Wanted to give an update on our retirement journey as everyone here has answered so many questions for us.

Background: In March 2020, dh wanted to retire (I’d mostly been a SAHM for the previous 20 years), and I didn’t think he could. Other than bringing the money in, he had little to do with our finances. I knew that he was being unrealistic. We went for a two-hour consult with a recommended FA, and she said that he could retire IF he got a part-time job to bring in $1,500/month until he was 65. He continued to work another year and then did just that in spring 2021.

The first two years, we coasted along. Eventually, dh got two part-time jobs as they filled different roles for him. Mid-2023 we went to a two-night retirement class just to see what we might have missed and as part of that, we tried to do an actual budget and problems appeared. Some of it was user error, but, mainly, I was just mad at us – this isn’t rocket science; let’s be grown-ups and do the work that needs to be done to get a handle on this stuff. So, we did a free trial of You Need a Budget. I didn’t love it, but dh did and I was willing to go with anything that increased his engagement.

Bottom line: We now have a year of data. We really get it now! Our “budget” vs our actual spending was $3,200 off and $3k of that can be attributed to unexpectedly having to remove a tree. But, hey, those kinds of things always are going to pop up so we’ll build that in next year. Every month we reconcile my checkbook and banking numbers with his YNAB numbers to make sure that they match. But the best thing to come from this is his increased knowledge of the numbers and my peace of mind that if I get hit by a bus tomorrow he’ll be good. And we’ve had great conversations about what we want our future to look like. We agreed to use a Vanguard Personal Advisor to help, and that’s been wonderful. That advisor says that dh can quit work altogether, but he’s not there yet. I think now that he understands the numbers, he sees how lean we were running all those years. :grimacing: My goal is to get him down to one part-time job next year and go from there. Part of our new spending plan/goals is to travel more. We just got back from more than a week in Europe, tomorrow I am flying to the East Coast for a week to meet some cc friends, and then the day after I get back, we will fly out to see ds2. Life is pretty good.

Anyway, just want to thank everyone again. I still have so many questions, but y’all really helped make this happen.

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9431

Congratulations, Youdon_tsay! Thanks for sharing your journey.

I also follow a lot of Financial Independence Retire Early (FIRE) podcasts even though I’m closer to actual retirement.

I will say two gaps I’ve noticed in almost every one of those podcasts and Facebook groups is consideration of:

  1. the healthcare piece (an assumption that if one adopts a healthy life style big health issues can be avoided), and

  2. the future need to fund the ‘no go’ years - when one might need 24/7 aides or institutional care.

I actually heard the host of one of the top FIRE podcasts (in his forties) asking a guest - “so what happens if a person is old and doesn’t have money for care?” I guess if you never watched an elderly parent struggle that aspect of life wouldn’t have occurred to you (although you’d think may have - before giving out advice to thousands people…!).

I also like “The Retirement Answer Man” podcast. He talks in very simple terms. I found bogleheads overwhelming a few years ago (confusing info overload) but will check it out again …

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9432

Yes, yesterday after dh and I did our last reconciliation of our fiscal year, we agreed that this works barring a major health catastrophe and it might even work then. We don’t have LTC insurance; we are self-insuring.

One thing we’ve done is tour retirement communities here and where ds1 lives. I call these old people field trips. I’m the kind of person who likes to gather all the data before I need it so that when the time comes to make a decision I’ve already done a lot of the legwork and mental work.

I also listen to a lot of financial podcasts! I’ll have to add The Retirement Answer Man to the list.

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9433

I’m sure that this tool for looking at LTC in different US areas gives imprecise results. But it’s still interesting for ballpark idea of costs, general comparison between areas. Link -

screenshot - Boston example

image
image2010×426 53.5 KB

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9434

Something I did realize recently is that IF we have high long term care expenses, it will be more than 7.5% of income… ie tax deductible. Thus much of our traditional (non-Roth) IRA withdrawals in the bad year(s) would net out as untaxed.

https://www.jacksonhewitt.com/tax-help/tax-tips-topics/personal-finance-savings/deducting-medical-and-dental-expesnse-on-your-2024-taxes/

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9435

Great point. I hadn’t thought of that!

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9436

When my husband got laid off just after turning 60, we did not think we could afford for that to be his early retirement. Then we ran the numbers. He was being paid until 60 1/2 and getting a year’s salary as severance. So technically we only had to bridge 3 1/2 years. Then we looked at expenses. He was going into the office 5 days a week (this was pre-pandemic). The cost of his commute and lunches was not insignificant and would no longer be in our budget. So we just had to figure out how to pay for 3 1/2 years of lower annual expenses.

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9437

Your H is the former teacher and the grocery store checkout person, right? We are sort of a few years behind you, except I have been the main breadwinner for the last 27 years, and the carrier of all things insurance.

He’s been officially retired since August 1. He decided not to be the casino dealer. Long story short, it was not good for his mental health, and I was 100% on board with the decision. We had/have enough $$$ with his summer checks, 1 overlapping pension check (a little less than half his salary) and paying out his sick days (at a whopping $32/day) to last us at our normal income until October.

I was on board with him retiring, but said I wanted him to make $2000/month after taxes, though honestly I’d take $1000 or even anything. He NEEDS to work. He is 100% on board with this. Once he finished cleaning out a bunch of stuff/ebaying, he’s been a beast to live with staying at home. He had applied in June to work at Planet Fitness, but it was already full until 3 weeks ago. He now opens on the weekends, and can eventually pick up shifts during the week. Even though it’s minimum wage, it is really good for him. He talks to people all day long, and everyone knows him either from his 40+ years at various gyms around town plus teaching 32 years. At one point, there were 4 people at the desk checking in separately, and he had taught all 4! But, he needs to pick up more shifts during the week or find something else, because those days are hard on all of us. He still swears he doesn’t miss teaching at all, so I’m thankful for that. He just gets so bored at home and won’t do anything about it (and drives me nuts!)

But all of this, plus learning more about ACA insurance has got me to re-thinking my retirement plans. H retiring is easy. We can live without him working if we had to.
I raised my family on a whole lot less. Originally we wanted to leave as soon as I could (3 years at age 55) and move somewhere we would both work dumb part time jobs and travel. I don’t think our numbers work. We would have to work a lot more than I’d like, plus in a new job I’d have no flexibility with vacation, whereas now I get 6 weeks a year and can leave whenever. Plus, I know our insurance. I didn’t realize the ACA plans didn’t cross state lines! We live in a small city on a state line. There’s not much here to choose from at all, let alone good choices. The nearest cities are across the state line! Of course, if we moved to the neighboring state, that might work, but still. It’s scary. When I’m 55, H will be 59 and that’s a LONG time to wait until Medicare.

So, right now I’m planning to work until age 60. H will be 64 and closer to Medicare. He’s the one (at least right now) with the important (cancer) doctor. Just making that decision took a LOT of stress off of me. Sorry for the book. I can’t talk much about this to H, because his eyes glaze over and he wouldn’t remember anything I said anyway. 100% of the financial planning, and anything adulting falls on me… another stressor.

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9438

“Talk” all you want… it helps others learn and ponder their own situation.

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9439

Thank you so much to all who replied, I really do appreciate your perspective and experiences. Firstly, as of now we have about 3.5 years worth of expenses in liquid non retirement assets. My inherited IRA is over one years worth of expenses, and needs to be exhausted by 2034. We will both be eligible for SS, yes. It is my understanding that “the rule off 55” allows DH to withdraw from his current employer 401K without early penalty. That currently has about 6 years worth of expenses, and he maxes is it annually, and will add the catch up next year when he turns 50. My SEP IRA and his rollover IRA have about 5 years of expenses currently. All of these are without taxes, so need to adjust downward and depends if our mortgage is paid off before 2030.

I may be naive regarding the health benefits, but DH works for a huge global corporation, so hoping any changes wouldn’t be immense.

Variability will be in his pension and our SS depending on when we will “need” to tap those. At full benefit, his pension and both our SS would cover almost all of our expenses.

I will spend some time doing some homework with the resources you all have so kindly shared!

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9440

Yep, that’s our story. The checker job nurtures his soul. He sees and works with his former students and families. He just got his third raise, but that job still pays less than half the other job, which is why he wants to keep the second one.

Have you met with a financial advisor? That was so critical for us.

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9441

In the spirit of updates, I’m four weeks into what will be something between a gap year and a retirement. At the middle age of 50, I am not stressing about which it will end up being. DW has been able to stay at home since our first child, has talked about going back to work but hasn’t started the process. After the first month, I don’t know how I would find time for work. :smile:
We have a one year cushion of paid COBRA, then 5 months I could purchase to get to the new year. Jan 1, 2026 I would want to either have a job that includes health care or I will have to research the CA exchange. I plan to keep income low enough to get some significant subsidies by drawing from cash reserves the next couple of years.
The biggest task that has been mentioned a few times and I really need to get started on is getting a handle on expenses. We have always lived well below our means and simply spend on what we feel is worth it. This has actually kept our expenses artificially low, as we have a pretty high bar. But if we enter the phase where there is no longer income coming in, we won’t spend anything without a budget.
We are settling into a routine that includes more pickleball, soccer, swimming and hikes. Still have S31 to keep me from overthinking things.
Drawing cash until about 55, then would need to re-evalutate, considering SEPP, ROTH, health insurance etc.
Other than the cash reserves for the next few years and full enough funded 529’s, our portfolio is extremely aggressive. My thought is I don’t want to come out of the next five years still on the fence of the montecarlo simulations. I would prefer to be solidly one way or the other.

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9442

Bringing this up again because there are a lot of posts where people are thinking about retirement.
Track ALL of your expenses for several months, or ideally a year or more, to get a good sense of what you really spend. There are spreadsheets that have lots of different categories - one of those helped us. For the “future” expenses, incorporate expenses that don’t happen often - buying cars, updating home, paying for weddings, gifting to kids, etc. You want your picture to be as accurate as possible. Consider tracking things in different categories, such as needs/must pay, vs. wants. For example, we have a pretty big line item for travel, but that can stop if we need it to. Taxes and home upkeep cannot.
Also - I know some people try to keep income low to help with medical insurance, but when income is low is actually a good time to think about converting to Roth, especially if you’re young and the Roth can grow tax free for many years.
If I could go back in time, one thing I would have done differently is save more in a Roth while I was working.

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9443

Yes, talk all you want. Often the commentary here makes others feel they are “not alone” in the difficulties - all of it - insurance, money, mental health, etc.!

Could you H tutor? Name his price and his hours?? English as second language tutor? Adult ed?

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9444

One the Title I money comes in to our school district, he’s supposed to start tutoring at his old school. I’m not sure what that will entail or how much. But it should be something. He also has to come up with things for himself. Anything I suggest goes in one ear and out the other.

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9445

I sometimes think retirement and retirement lifestyle comes as an unexpected shock to the system. Not for everyone but for some.

I hope with time he - and you! - adjusts.

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9446

We have friends who own franchises in a tutoring and test prep business. They are always looking for good tutors - especially for standardized test (SAT/ACT) prep. Though, the need for math tutors is higher. He doesn’t have to necessarily tutor through the public schools.

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9447

You have a quite unique situation and tough to know as an outsider on what can mix up some decisions moving forward.

With extremely aggressive portfolio - should that change? IDK if there are any ‘good’ annuities to invest in for example – after a year one can have some monthly cash withdrawals w/o penalty and ‘safe’ investment money (yes not 100% safe but IMHO better than bonds - get guaranteed contract performance). Our financial advisor helped us reduce our risk by having annuities purchased from our IRA’s and 401k funds. DH’s 401k continues to grow, and when that grows too big is when we look to purchase another annuity (we have 5 annuities currently and strong 6 figure money in 401k - 3 stock groups/very diversified).

9448

I chuckle at him tutoring for the SAT. He’s best suited for working with elementary kids. He’s not an academic. Math is his weak spot, but he can do elementary math. He is very good working with kids though. He had to tutor second grade math once/week last year as part of his regular teaching and enjoyed that, especially working with the Hispanic kids. And he’s had to also do reading here and there. I know he wouldn’t be interested in a private setting. But thanks for the thought!

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9449

You understand that you are subject to the credit risk of the financial institution issuing the annuity. Bonds can be issued by companies with stronger and weaker credit than those issuing annuities.

The economics of annuities is that you are paying a company to take your liquid assets and convert them into some type of income stream. They are reinvesting the money they take in into other assets that can both generate the income stream and make them a tidy profit. Annuities are among the highest commission paying products precisely because they are so lucrative to the issuer.

I get it that some people are willing to pay for a fixed income stream, but they need to realize that there are more efficient/less expensive ways to do it. I’d be skeptical of a FA that pushes this product. It’s a lazy way for them to satisfy an income generation need for a client that is also likely very lucrative to them.

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